Eligibility

Last updated: 5 April 2018

The R&D Tax Incentive is a self-assessment programme. This means you are responsible to assess your company and your R&D against eligibility requirements as defined by legislation to determine if you can receive the tax incentive.

To be eligible for the R&D Tax Incentive:

You must be an eligible R&D entity

You are an eligible R&D entity if you are a company that is:

incorporated under Australian law, or

incorporated under foreign law but an Australian resident for income purposes, or

You must have conducted eligible R&D activities

Eligible R&D activities are either ‘core R&D activities’ or ‘supporting R&D activities’. To register under the programme, you must have at least one core R&D activity. Supporting R&D activities are optional.

Core and supporting R&D activities are defined under sections 355-25 and 355-30 of the Income Tax Assessment Act 1997. The R&D activities you register for the tax incentive must meet all aspects of the legal definitions for either a core or supporting R&D activity. You must keep documentation and records that demonstrate the eligibility of all registered activities.

Core R&D activities

Under section 355-25 of the Income Tax Assessment Act 1997:

Core R&D activities are experimental activities:

whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:

is based on principles of established science; and

proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and

that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).

Some types of activities are excluded under section 355-25(2) of the legislation from being core R&D activities. Some of these excluded activities may be eligible for the R&D Tax Incentive as supporting R&D activities if they meet all of the requirements.

R&D 101

George has an idea to test, follow his story to find out what is an hypothesis driven experiment.

Need more information?

The R&D Tax Incentive: Guide to Interpretation explains how the department interprets and applies the definitions of eligible R&D activities. The document also lists and explains the types of activities that are excluded from being core R&D activities. If you are self-assessing the eligibility of your R&D activities for the programme, it is highly recommended to use this document as guidance.

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